Chairman Jeb Hensarling runs the House Financial Services Committee meeting to organize for the 115th Congress on Feb. 2, 2017.
The Consumer Financial Protection Bureau’s aggressive regulatory and enforcement mission, crafted as a part of the Dodd-Frank financial reforms, has long drawn the ire of congressional Republicans who are eager undermine its power and independence—and with a deregulatory fanatic as president, they may now have their best shot.
Leading that charge is House Financial Services Committee Chairman Jeb Hensarling, whose Wall Street deregulation bill—the Financial CHOICE Act—forms the GOP’s blueprint for winding back Dodd-Frank. In a memo obtained by The New York Times last week, Hensarling outlined his plan to eviscerate the CFPB’s power.
In a follow-up interview this week, the Texas congressman called the CFPB a “rogue, unconstitutional” agency. “I want to protect consumers from the Orwellian-named Consumer Finance Protection Bureau—that’s the most important thing we want to do,” he told Bloomberg.
Since the Consumer Financial Protection Bureau was created as a part of the Dodd-Frank financial reforms in 2011, it has recovered a reported $11.7 billion for more than 27 million consumers and cracked down on predatory practices in the auto, student, home loan, banking, and credit card industries, with a series of rulemakings and enforcement actions.
The agency, which was the brainchild Massachusetts Senator Elizabeth Warren when she was still a Harvard Law professor, is notably independent—led by a single appointed director, and with funding not from Congress but from the Federal Reserve.
Hensarling’s plan calls for drastically weakening the bureau’s director by allowing the president to fire without cause, and undercuts the agency by scaling back enforcement authority, limiting its ability to promulgate rules, and completely repealing its consumer complaint system. As Catherine Rampell points out, hamstringing the CFPB could make consumer protections even weaker than before Dodd-Frank was passed, since that law consolidated regulatory authority away from other agencies and into the CFPB. In short, Hensarling’s plan could leave the CFPB with a broad swath of regulatory responsibility but no power to enforce it.
Earlier this month, Trump’s top economic advisor Gary Cohn said that Obama’s fiduciary rule limits consumer choice by providing only “healthy” retirement options. In the same spirit, Hensarling wants you to believe that consumer protection laws are hurting the average American. “The greatest way to protect consumers is to ensure that we have competitive, innovative, vibrant credit markets and in many respects, CFPB has hurt them,” he said in the Bloomberg interview. “This current unconstitutional rogue agency has got to be reformed.”
Like Cohn, Hensarling argues that his particular piece of trickle-down mischief—handcuffing the CFPB—will help the middle class. As with Cohn, it is the only card he can play: he can’t very well say that he’s merely doing the bidding of his Wall Street friends.
Over his career, Hensarling’s campaigns have received millions of dollars from powerful Wall Street banks, insurance giants, investment firms, and consumer finance companies. In 2016 alone, his campaign and leadership PAC received more than $75,000 from JP Morgan Chase, Bank of America, and Goldman Sachs. The top contributor to his campaign committee was Rent-A-Center, which gave $18,300. Consumer watchdogs are pushing hard for the CFPB to crack down on such rent-to-own businesses as Rent-A-Center that charge exorbitant interest rates to lease products, often leaving customers with piles of debt. The industry has long evaded oversight because it operates outside of the traditional lending regulatory framework.
While leading the Wall Street deregulation charge at the behest of his donors, Hensarling is trying to convince Americans that it’s for their own good. For that, Jeb Hensarling is our Trickle Downer of the Week.
Tax Cuts for the rich. Deregulation for the powerful. Wage suppression for everyone else. These are the tenets of trickle-down economics, the conservatives’ age-old strategy for advantaging the interests of the rich and powerful over those of the middle class and poor. The articles in Trickle-Downers are devoted, first, to exposing and refuting these lies, but equally, to reminding Americans that these claims aren’t made because they are true. Rather, they are made because they are the most effective way elites have found to bully, confuse and intimidate middle- and working-class voters. Trickle-down claims are not real economics. They are negotiating strategies. Here at the Prospect, we hope to help you win that negotiation.